European markets close higher as investors digest Fed outlook, German data

LONDON — European stocks closed mostly higher on Wednesday as markets digested remarks from U.S. Federal Reserve Chair Jerome Powell and promising German data.

He added that inflation is still “soft” and that the Fed is committed to current policy, attempting to ease some worries around higher interest rates and inflation. Investors worry that a spike in prices due to federal stimulus could force the central bank to raise short-term borrowing costs.

On Wall Street, the major stock averages wiped out earlier losses and traded higher as investors piled into names sensitive to an economic comeback.

Back in Europe, the German economy grew by more than expected in the final quarter of 2020, official figures showed Wednesday, as strong exports and construction activity supported GDP growth of 0.3%.

Earnings were a key driver of individual share price action in Europe Wednesday, with Accor, Wolters Kluwer, Lloyds, William Hill, Metro Bank, Reckitt Benckiser and Iberdrola all reporting before the bell.

Lloyds posted a full-year pretax profit of £1.2 billion pounds ($1.70 billion), much lower than the £4.4 billion in 2019, but surpassing analyst expectations of £905 million. Shares of the U.K. lender were marginally higher by the market close.

Telecom Italia shares jumped 9% after forecasting a stabilization of profits and sales, while travel-sensitive stocks Tui, Carnival and Dufry climbed 12.8%, 10.5% and 7.5%, respectively.

Wolters Kluwer dropped more than 6.3% as analysts reacted indifferently to the Dutch IT firm’s earnings report and outlook.

German sportswear brand Puma fell 2.1% after warning of a heavy hit to its short-term profit outlook as a result of pandemic-induced lockdowns.

-CNBC.com staff contributed to this market report.

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